What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-08-12 compared with 2025-05-13 · 264 added, 158 removed, 134 unchanged (76% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion

14 unchanged sentences

intends to become the full-service digital marketing and brand development face of the alcoholic beverage space.

We also intend to

integrate the supply, sales, and marketing facets of the alcoholic beverage space into one easy to use platform and become the one-stop-shop for

We also intend

to integrate the supply, sales, and marketing facets of the alcoholic beverage space into one easy to use platform and become the one-stop-shop for

everything related to alcohol.

4 unchanged sentences

increase brand recognition thereof, and drive sales thereof through our e-commerce platform partner.

In May 2024, we acquired a minority stake of common

Since May 2024, we own a minority stake of common

shares of Cannon Estate Winery Ltd., a British Columbia corporation, an owner of Cannon Estate Winery.

In June 2024, we acquired a minority stake of

common shares of DRNK Beverage Corp., a British Columbia corporation (which became Chase Mocktails Ltd.), operating in the non-alcoholic

Since June 2024, we own a minority

stake of common shares of DRNK Beverage Corp., a British Columbia corporation (which became Chase Mocktails Ltd.), operating in the non-alcoholic

and ready-to-drink beverage markets.

As of December 31, 2024, the Company has recorded an impairment based on its evaluation of the investee.

Refer to Note 5 to our unaudited condensed consolidated financial statements for further disclosure.

Since April 2025, we have a wholly owned subsidiary SWOL Holdings Inc.

In July 2025, we also formed a wholly owned subsidiary, YHC Online Limited, in Hong Kong.

Recent Developments

On September 13, 2024, the Company entered into an at-the-market offering

agreement (“ATM Agreement”) with H.C.

Wainwright & Co., LLC, as sales agent (“HCW”), relating to the sale

of common stock.

During the first quarter of 2025 ended March 31, 2025, the Company issued an aggregate of 413,520 shares of

common stock pursuant to such ATM Agreement for net proceeds of $5,178,821.

On September 13, 2024, the Company entered into

an at-the-market offering agreement (“ATM Agreement”) with H.C.

Wainwright & Co., LLC, as sales agent (“HCW”),

relating to the sale of common stock.

During the three months ended June 30, 2025, the Company issued an aggregate of 1,947,592 shares

of common stock pursuant to such ATM Agreement for net proceeds of $6,380,248.

The Company paid the sales agent compensation with respect

to the sale of such shares in the amount of $197,534.

In July 2025, the Company raised an additional

approximately $26 million in gross proceeds under the ATM Agreement through the issuance of common stock.

The proceeds are being used

to support working capital, general corporate purposes and ongoing strategic initiatives.

On April 1, 2025, we entered into a Supplementary

Distribution Agreement (the “Supplementary Distribution Agreement”) with Of The Earth Distribution Corp., a Canadian corporation

(the “Distributor”), pursuant to which the Company granted to Distributor the exclusive right to distribute, market, and sell

SWOL Tequila products within Thailand and Greece until June 28, 2029.

The Supplementary Distribution Agreement also amends Supplier Agreement

between the Company and the Distributor, dated June 28, 2024, by providing the Distributor exclusive distribution rights to sell SWOL

Tequila in all of Canada without any territorial limitations.

(the “Distributor”), pursuant to which the Company granted to Distributor the exclusive right to distribute, market, and

sell SWOL Tequila products within Thailand and Greece until June 28, 2029.

The Supplementary Distribution Agreement also amends Supplier

Agreement between the Company and the Distributor, dated June 28, 2024, by providing the Distributor exclusive distribution rights to

sell SWOL Tequila in all of Canada without any territorial limitations.

On April 2, 2025, David Lazar resigned as President

and as member of our Board of Directors (the “Board”), effective immediately.

In connection with such resignation, the Company issued Mr.

Lazar 2,857 shares of common stock (on post-split basis), in accordance with

his separation agreement with the Company.

On April 16, 2025, the Board approved and recommended

for stockholder approval at the 2025 Annual Meeting of Stockholders, the proposal to adopt a Certificate of Amendment to our Articles

of Incorporation (the “Certificate of Amendment”), to increase the number of authorized shares of common stock of the Company

from 10,000,000 shares to 350,000,000 shares, each share of common stock having a par value of $0.0001.

The Board also set the date for

the Company’s 2025 Annual Meeting of Stockholders for May 30, 2025.

The Certificate of Amendment will become effective upon stockholder

On April 21, 2025, the Company effected a one-for-thirty-five

reverse stock split of its issued, outstanding and authorized common stock (the “Reverse Stock Split”).

The Reverse Stock

Split became effective at 12:01 a.m.

Eastern Time on April 21, 2025, and our common stock began trading on a post-split basis

on April 21, 2025.

No fractional shares were issued in connection with the Reverse Stock Split and fractional amounts were rounded up

to the next highest whole number at the participant level.

As a result of the

Reverse Stock Split, the total number of authorized common stock of the Company decreased to 10,000,000 shares.

The Reverse Stock Split

became effective at 12:01 a.m.

Eastern Time on April 21, 2025, and our common stock began trading on a post-split basis on April

No fractional shares were issued in connection with the Reverse Stock Split and fractional amounts were rounded up to the next

highest whole number at the participant level.

On April 23, 2025, the Audit Committee of the

1 unchanged sentence

firm for the fiscal year ending December 31, 2025, effective immediately.

On June 2, 2025, the Company held LQR House Inc.

2025 Annual Meeting of Stockholders (the “Annual Meeting”) at which meeting:

(1) the Company’s stockholders approved

an amendment to the Articles of Incorporation to authorize the Company to effect the increase of authorized shares of common stock of

the Company from 10,000,000 to 350,000,000 shares, (2) the stockholders re-elected Sean Dllinger, Yilin Lu, Lijun Chen, Jing Lu, and Hong

Chun Yeung to serve as directors of the Board until the Company’s 2026 annual meeting of stockholders, or until such persons’

successors are duly elected and qualified, or until such persons’ earlier resignation, death, or removal.

Following the Annual Meeting, on June 2, 2025, the Company filed the

Certificate of Amendment with the Secretary of State of Nevada and effected the increase of the number of authorized shares of common

stock of the Company from 10,000,000 shares to 350,000,000 shares, each share of common stock having a par value of $0.0001.

Following the Annual Meeting, the Board approved

appointment of Lijun Chen as the Chairman of the Board.

The Board also approved that the Audit Committee of the Board shall consist of

Hong Chun Yeung (Chair), Lijun Chen and Jing Lu, the Compensation Committee of the Board shall consist of Jing Lu (Chair), Yilin Lu, Lijun

Chen, and Nominating and Corporate Governance Committee of the Board shall consist of Jing Lu (Chair), Lijun Chen, Yilin Lu.

On or about July 11, 2025, the Company, along with over two dozen parties including several officers and directors of the Company, has

been named as a defendant in an action before the Eight Judicial District, Clark County, Nevada titled Kingbird Ventures, LLC (“Kingbird”)

Sean Dollilnger, et al.

The complaint alleges, among other things, breach of fiduciary duties, violations of the Nevada Revised Statutes

78.650, 78.630, 207.400 90.570 and 32.010, alter ego liability, civil conspiracy (the “Complaint”).

The Complaint seeks, among

other things, damages in an unspecified amount, a declaratory judgment, a temporary restraining order and preliminary injunction freezing

the Company’s assets, the assets of the Company’s Chief Executive Officer, Sean Dollinger, the assets of any of the other

defendants controlled by Sean Dollinger and others, injunctive relief to prevent any further material corporate decisions by the Company,

for the court to restrain the Company, its directors, officers and stockholders from making any significant changes to the Company’s

governance or capital structures to further entrench the Company’s Chief Executive Officer a receiver be appointed over the Company

and undisclosed monetary damages.

The Complaint was filed by Kingbird Ventures, LLC, recent stockholder of the Company, on July 11, 2025,

The Company intends on vigorously defending the litigation.

On August 6, 2025, the Board appointed Yilin Lu

to serve as a President of the Company and replaced him on the Compensation Committee and Nominating and Corporate Governance Committee

with Hong Chun Yeung.

The Services and Brands We Market

LQR House is an American online retailer of alcohol

CWS Platform is an American online retailer specializing in selling alcohol products, striving to become the most trusted and

convenient destination for online alcohol purchases.

Combining the personalized service of a neighborhood alcohol shop with the efficiency

of e-commerce, we offer a wide selection of products, including our exclusive brand, SWOL Tequila, all at competitive prices with fast

shipping and around-the-clock convenience.

At the heart of our brand is a commitment to exceptional customer service, driving us to continuously

innovate our operations for an enhanced shopping experience.

From user-friendly website navigation and a top-rated mobile app to detailed

order tracking and personalized product recommendations, we are revolutionizing the online alcohol shopping experience, ensuring customer

satisfaction remains paramount in all our endeavors.

The CWS Platform is an American online

retailer specializing in selling alcohol products, striving to become the most trusted and convenient destination for online alcohol

Combining the personalized service of a neighborhood alcohol shop with the efficiency of e-commerce, we offer a wide selection

of products, including our exclusive brand, SWOL Tequila, all at competitive prices with fast shipping and around-the-clock convenience.

At the heart of our brand is a commitment to exceptional customer service, driving us to continuously innovate our operations for an

enhanced shopping experience.

From user-friendly website navigation and a top-rated mobile app to detailed order tracking and personalized

product recommendations, we are revolutionizing the online alcohol shopping experience, ensuring customer satisfaction remains paramount

in all our endeavors.

The following products and services constitute

1 unchanged sentence

consumers, wholesalers, and third-party alcohol brands:

SWOL Tequila is a limited-edition blend of tequila made in exclusive batches of up to 10,000 bottles which was originally owned by Dollinger Innovations and transferred over to us pursuant to the Tequila Asset Purchase Agreement.

Pursuant to the Tequila Asset Purchase Agreement, we purchased all of the right, title and interest in the trademarks SWOL and all associated trade dress and intellectual property rights and all labels, logos and other branding bearing the SWOL marks or any mark substantially similar to the same.

Tequila bearing the “SWOL” trademark is produced by Casa Cava de Oro S.A., an authentic tequila distillery in Jalisco, Mexico, imported into the United States through Rilo Import & Export (“Rilo”) by Country Wine & Spirits LLC (“CWS”) and sold to retail customers in the United States via the CWS Platform and in CWS’s physical locations.

Vault is the exclusive membership program for the CWS Platform, which is offered and managed by the Company.

We receive the subscriptions fees generated by this program.

Through the CWS Platform, users can sign up for this exclusive membership where they will have access to all products available through CWS combined with special membership benefits.

Soleil Vino will be a wine subscription service marketed on the CWS Platform that will offer a selection of vintage and limited production wines.

Through the CWS Platform, users will be able to sign up for this exclusive membership where they will have access to curated selections of wine from around the world.

With Soleil Vino, we intend to create a premium wine subscription service on the market with high qualities and diverse selections of wine offerings.

Pursuant to an asset purchase agreement, dated May 31, 2021, between us and Dollinger Holdings LLC, we purchased all of the right, title and interest in all trademarks regardless of registration status for Soleil Vino and all associated trade dress and intellectual property rights, all labels, logos and other branding bearing the Soleil Vino marks or any mark substantially similar to the same, and all website and all related digital and social media content including but not limited to influencer networks, http://www.soleilvino.com, and all related content, and all related sales channels was transferred.

LQR House Marketing is a marketing service in which we utilize our marketing expertise to help our wholly owned brands and third-party clients market their products to consumers.

For example, by engaging us for our marketing services, our clients gain the ability to advertise and sell their brand on the CWS Platform.

Tequila is a limited-edition blend of tequila made in exclusive batches of up to 10,000 bottles which was originally owned

by Dollinger Innovations and transferred over to us pursuant to the Tequila Asset Purchase Agreement.

Pursuant to the Tequila Asset

Purchase Agreement, we purchased all of the right, title and interest in the trademarks SWOL and all associated trade dress and intellectual

property rights and all labels, logos and other branding bearing the SWOL marks or any mark substantially similar to the same.

bearing the “SWOL” trademark is produced by Casa Cava de Oro S.A., an authentic tequila distillery in Jalisco, Mexico,

imported into the United States through Rilo Import & Export (“Rilo”) by Country Wine & Spirits LLC (“CWS”)

and sold to retail customers in the United States via the CWS Platform and in CWS’s physical locations.

is the exclusive membership program for the CWS Platform, which is offered and managed by the Company.

We receive the subscriptions

fees generated by this program.

Through the CWS Platform, users can sign up for this exclusive membership where they will have access

to all products available through CWS combined with special membership benefits.

Vino will be a wine subscription service marketed on the CWS Platform that will offer a selection of vintage and limited

production wines.

Through the CWS Platform, users will be able to sign up for this exclusive membership where they will have access

to curated selections of wine from around the world.

With Soleil Vino, we intend to create a premium wine subscription service on

the market with high qualities and diverse selections of wine offerings.

Pursuant to an asset purchase agreement, dated May 31, 2021,

between us and Dollinger Holdings LLC, we purchased all of the right, title and interest in all trademarks regardless of registration

status for Soleil Vino and all associated trade dress and intellectual property rights, all labels, logos and other branding bearing

the Soleil Vino marks or any mark substantially similar to the same, and all website and all related digital and social media content

including but not limited to influencer networks, http://www.soleilvino.com, and all related content, and all related sales channels

was transferred.

House Marketing is a marketing service in which we utilize our marketing expertise to help our wholly owned brands and third-party

clients market their products to consumers.

For example, by engaging us for our marketing services, our clients gain the ability

to advertise and sell their brand on the CWS Platform.

Principal Factors Affecting Our Financial Performance

Our operating results are primarily affected by

the following factors:

our ability to acquire new customers and users or retain existing customers and users;

our ability to offer competitive pricing;

our ability to broaden product or service offerings;

industry demand and competition;

our ability to leverage technology and use and develop efficient processes;

ability to attract and maintain a network of influencers with a relevant audience;

ability to attract and retain talented employees and contractors;

● market conditions and our market position.

to make profitable investments in complimentary business.

Our operating results are primarily affected

by the following factors:

to acquire new customers and users or retain existing customers and users;

to offer competitive pricing;

to broaden product or service offerings;

demand and competition;

to leverage technology and use and develop efficient processes;

to attract and maintain a network of influencers with a relevant audience;

to attract and retain talented employees and contractors;

conditions and our market position.

ability to make profitable investments

in complimentary business.

Our Growth Strategies

1 unchanged sentence

business include the following:

Collaborative Marketing.

We intend to develop leading brands for up-and-coming companies and start-ups and align with celebrities and influencers with significant followings to enhance their online marketing presence.

Expand Our Brand.

We intend to continue expanding and developing our existing SWOL brand by purchasing and selling larger amounts of SWOL products to accelerate brand recognition and increasing our marketing presence.

Opportunistic Acquisitions.

We intend to pursue opportunistic acquisitions with existing alcohol brands and companies that have distribution licenses and physical storage locations and acquire technology that complements our business.

Collaborative

We intend to develop leading brands for up-and-coming companies and start-ups and align with celebrities

and influencers with significant followings to enhance their online marketing presence.

We intend to continue expanding and developing our existing SWOL brand by purchasing and selling larger amounts

of SWOL products to accelerate brand recognition and increasing our marketing presence.

Opportunistic

Acquisitions.

We intend to pursue opportunistic acquisitions with existing alcohol brands and companies that have distribution

licenses and physical storage locations and acquire technology that complements our business.

Results of Operations

Comparison of Three Months Ended March 31,

2025 and March 31, 2024

Comparison of Three Months Ended June

30, 2025 and June 30, 2024

The following table sets forth key components

of our results of operations during the three months ended March 31, 2025 and March 31, 2024.

of our results of operations during the three months ended June 30, 2025 and June 30, 2024.

Three Months Ended

16 unchanged sentences

$ (2,209,293 )

For the three months ended March 31, 2025

For the three months ended June 30, 2025

and 2024, service revenues were $15,319 and $39,980, respectively.

1 unchanged sentence

beverage brands to utilize access to the CWS Platform, as well as vault memberships.

Service revenues increased by $33,565 primarily driven

by a higher volume of marketing services provided.

For the three months ended March 31, 2025, product

The decrease of $24,661, or approximately 62%, was

primarily due to a lower volume of marketing services provided during the current period compared to the prior year.

For the three months ended June 30, 2025, product

revenues were $483,209 compared to $517,937 in the similar 2024 period.

5 unchanged sentences

Cost of Revenue and Gross Profit (Loss)

For the three months ended March 31,

For the three months ended June 30, 2025

and 2024, service cost of revenues were $0 and $69,023, respectively.

Cost of service revenues decreased by $35,808 in 2025 due

to our ability to support marketing campaigns via dedicated personnel and ceased certain digital ad costs to support campaigns.

Cost of service decreased by $69,023 in 2025.

The decrease of $69,023

was primarily due to overall decline in service-related activity compared to the prior year.

Product cost of revenues was $414,022 and $641,084

during the three months ended March 31, 2025 and 2024.

during the three months ended June 30, 2025 and 2024.

The decrease was primarily due to the decline in product revenue during the period,

resulting from lower sales volume on the CWS Platform.

Gross profit (loss) was $30,158 and ($79,497)

for the three months ended March 31, 2025 and 2024.

The Company has incurred gross losses in 2024 as it transitions its strategies from

marketing to the CWS Platform.

Management is exploring various strategies, including customer acquisition and new partnerships, to increase

volume in order to achieve better gross margins in 2025.

Gross profit was $85,906 for the three months

ended June 30, 2025, compared to a gross loss of $(152,190) for the same period in 2024.

The gross loss in 2024 was primarily attributable

to the Company’s strategic transition from marketing services toward a focus on the CWS Platform.

In 2025, management continues

to explore initiatives aimed at improving gross margin performance, including customer acquisition efforts and the formation of new strategic

partnerships to drive higher transaction volume through the platform.

General and Administrative

For the three months ended March 31,

For the three months ended June 30, 2025

and 2024, general and administrative expenses were $2,207,612 and $1,357,395, respectively.

The increase was primarily attributable

to higher professional fees and personnel-related costs incurred during the current period.

In addition, the Company recognized approximately

$868,000 in non-cash stock-based compensation expense in 2025, compared to approximately $720,000 in the prior-year period.

The increase was primarily attributable to

higher professional fees, and administrative costs incurred during the current period.

Sales and Marketing

For the three months ended March 31,

For the three months ended June 30,

2025 and 2024, sales and marketing expenses were $80,676 and $764,807 respectively.

1 unchanged sentence

website development costs in the current period.

In the first quarter of 2024, the Company recorded significant expenses related to a

website development agreement with X-Media entered into in October 2023, which was fully written off during 2024.

The absence of similar

charges in 2025 contributed to the decline in sales and marketing expenses.

Net loss for the three months ended March

In the second quarter of 2024, the Company continuing to record significant expenses

related to a website development agreement with X-Media entered into in October 2023.

The absence of similar charges in 2025 contributed

to the decline in sales and marketing expenses.

Net loss for the three months ended June

30, 2025 and 2024 was $2,202,382 and $2,209,293, respectively.

Comparison of Six Months Ended June

30, 2025 and June 30, 2024

The following table sets forth key components

of our results of operations during the six months ended June 30, 2025 and June 30, 2024.

Six Months Ended

Revenue - services

Revenue - product

Total revenues

Cost of revenue - services

Cost of revenue - product

Total cost of revenue

Gross profit (loss)

Operating expenses:

General and administrative

Sales and marketing

Total operating expenses

Loss from operations

Other income (expense):

Total other income

Provision for income taxes

$ (4,592,032 )

$ (4,636,685 )

For the six months ended June 30, 2025 and

2024, service revenues were $92,675 and $83,771, respectively.

Service revenues are earned as we contract with third-party alcoholic

beverage brands to utilize access to the CWS Platform, as well as vault memberships.

The increase of $8,904, or approximately 11%, driven

by a higher volume of memberships services during the first quarter of 2025.

For the six months ended June 30, 2025, product

revenues were $835,193 compared to $955,240 in the similar 2024 period.

The decrease by $120,047 compared to 2024 was primarily attributable

to a decrease in sales volume through the CWS Platform during the quarter.

The reduction in revenue reflects lower customer traffic and

order activity on cwsspirits.com, which the Company believes was driven by less promotional activity compared to the prior year period.

Cost of Revenue and Gross Profit (Loss)

For the six months ended June 30, 2025 and

2024, service cost of revenues were $1,400 and $106,231, respectively.

Cost of service revenues decreased by $104,831 in 2025.

of $104,831 was primarily due to the overall decline in service-related activity compared to the prior year.

Product cost of revenues was $811,804 and $1,164,467

during the six months ended June 30, 2025 and 2024.

The decrease of $352,663 was primarily due to the decline in product revenue during

the period, resulting from lower sales volume on the CWS Platform.

Gross profit (loss) was $114,664 and ($231,687)

for the six months ended June 30, 2025 and 2024.

The gross loss in 2024 was primarily attributable to the Company’s strategic transition

from marketing services toward a focus on the CWS Platform.

In 2025, management continues to explore initiatives aimed at improving gross

margin performance, including customer acquisition efforts and the formation of new strategic partnerships to drive higher transaction

volume through the platform.

General and Administrative

For the six months ended June 30, 2025 and

2024, general and administrative expenses were $4,230,773 and $2,963,856, respectively.

The increase was primarily attributable to higher

professional fees and administrative costs incurred during the current period.

Sales and Marketing

For the six months ended June 30, 2025

and 2024, sales and marketing expenses were $487,529 and $1,551,222 respectively.

The decrease was primarily due to the absence of website

development costs in the current period.

In the first quarter of 2024, the Company recorded significant expenses related to a website

development agreement with X-Media entered into in October 2023, which was fully written off during 2024.

The absence of similar charges

in 2025 contributed to the decline in sales and marketing expenses.

Net loss for the six months ended June 30,

2025 and 2024 was $4,592,032 and $4,636,685, respectively.

Liquidity and Capital Resources

As of March 31,

As of June 30, 2025

and December 31, 2024, we had cash and cash equivalents of $4,566,936 and $5,386,789 respectively.

To date, we have financed our

operations primarily through issuances of common stock and sales of our products and services.

During the three months

ended March 31, 2025, the Company raised an aggregate of $9,230,236 in net proceeds through issuance of commons stock.

To date, we have financed our operations

primarily through issuances of common stock and sales of our products and services.

During the six months

ended June 30, 2025, the Company raised an aggregate of $15,610,483 in net proceeds through issuance of commons stock.

The Company issued

2,361,112 shares of common stock pursuant to at-the-market offering agreement, dated September 13, 2024, between the Company and H.C.

& Co., LLC, for net proceeds of $5,178,821.

Additionally, the Company received net proceeds of $4,051,415 from the issuance of 210,463

shares of common stock pursuant to exercise of warrants.

The accompanying unaudited condensed consolidated

financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of

liabilities in the normal course of business.

The Company has not generated profits since inception, has sustained net losses of $2,389,650

and $2,427,392 for the three months ended March 31, 2025 and 2024, and has negative cash flows from operations of $6,619,374 for the three

months ended March 31, 2025.

Wainwright & Co., LLC, for net proceeds of $11,559,068.

Additionally, the Company received net proceeds of $4,051,415 from the issuance

of 210,463 shares of common stock pursuant to exercise of warrants.

In July 2025, the Company

raised approximately $26,000,000 through issuance of common stock pursuant to at-the-market offering agreement.

The accompanying unaudited condensed consolidated financial statements

have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal

course of business.

The Company has not generated profits since inception, has sustained net losses of $4,592,032 and $4,636,685 for the

six months ended June 30, 2025 and 2024, and has negative cash flows from operations of $8,263,348 for the six months ended June 30, 2025.

The Company requires additional capital to operate and expects losses to continue for the foreseeable future.

These factors raise substantial doubts about the Company’s ability to continue as a going concern.

The Company’s

ability to continue as a going concern until it reaches profitability is dependent upon its ability to generate cash from operating activities

and to raise additional capital to fund operations.

Management is exploring various strategies, including customer acquisition and new

partnerships, to increase volume in order to achieve better gross margins and profitability.

The Company continues to seek investment

and acquisition opportunities which will help achieve its strategies.

The Company’s ability

to continue as a going concern for the next twelve months is dependent upon its ability to generate sufficient cash flows from operations

to meet its obligations, which it has not been able to accomplish to date, or to obtain additional capital to fund operations through

debt and/or equity financings.

Our failure to raise additional capital could have a negative impact on not only our financial condition

but also our ability to execute our business plan.

No assurance can be given that the Company will be successful in these efforts.

Throughout the next twelve months, the Company

intends to fund its operations from the funds raised through the July 2025 ATM offering.

To further support its operations and growth,

the Company may also pursue additional capital through public or private equity offerings, debt financing, or other strategic funding

sources, including continued use of ATM equity offerings.

Based on the current state of operations, the

July 2025 ATM offering , the additional capital sources available to the Company, and the cash on hand at August 12, 2025, the Company

believes that the substantial doubt about the Company’s ability to continue as a going concern has been alleviated.

Management believes

that the Company has sufficient capital to meet its financial obligations for the next 12 months as of the date of these financial

There can be no assurance as to the availability or terms upon which

such financing and capital might be available in the future.

If the Company is unable to secure additional funding, it may be forced to

curtail or suspend its business plans.

Cash Flow Activities

The following table presents selected captions

from our condensed statement of cash flows for the three months ended March 31, 2025 and 2024:

Three Months Ended

from our condensed statement of cash flows for the six months ended June 30, 2025 and 2024:

Six Months Ended

Net cash used in operating activities

3 unchanged sentences

$ (8,166,988 )

$ (3,345,742 )

Net cash provided by (used in) financing activities

3 unchanged sentences

Net cash used in operating activities for the

three months ended March 31, 2025 was $6,619,373, primarily due to our net loss of $2,389,650 partially offset by non-cash charges

of $868,189 and changes in our operating assets and liabilities of $5,097,912.

six months ended June 30, 2025 was $8,263,348, primarily due to our net loss of $4,592,032 and cash used in our operating assets

and liabilities of $5,251,720, partially offset by non-cash charges of $1,580,404.

Net Cash Used in Investing Activities

Net cash used in investing activities for the

three months ended March 31, 2025 and 2024 were $0 and $3,360,986, respectively.

In 2024, the Company invested $4,030,986 in mutual fund

investments, and received $670,000 back from an investment it was no longer pursuing.

Net cash used in investing activities was $8,166,988

and $3,345,742 for the six months ended June 30, 2025 and 2024, respectively.

Cash used during the current period was primarily attributable

to payments made in anticipation of entering into joint venture agreements.

As of June 30, 2025, these agreements had not been finalized,

and the related payments were recorded as prepaid joint venture agreements on the consolidated balance sheet.

In 2024, the Company invested $4,015,742 in mutual

fund investments and received $670,000 in proceeds from an investment it was no longer pursuing.

Net Cash Provided By (Used in) Financing Activities

Net cash provided by (used in) financing activities

for the three months ended March 31, 2025 and 2024 was $9,122,181 and ($547,515) respectively.

for the six months ended June 30, 2025 and 2024 was $15,610,483 and ($547,515) respectively.

In 2025, the Company received $4,051,415

1 unchanged sentence

In 2024, the Company paid $547,515 for repurchase

Contractual Obligations and Related Party Transactions

Funding Commitment Agreement

On November 1, 2023, the Company entered into

a Funding Commitment Agreement with KBROS, LLC, the Product Handler pursuant to the Product Handling Agreement as defined in Note 4.

to this agreement, the Company commits to provide annual funding to the Product Handler from time to time in the minimum amount of $2,500,000

to enable the Product Handler to purchase inventory from Company-approved vendors (“Vendors”) and for other purposes set forth

in the Product Handling Agreement.

The Company may combine all of the Company’s advances to Product Handler or on Product Handler’s

behalf, whether under this agreement or any other agreement.

The Company may, without notice to Product Handler, elect not to advance

funding for any inventory sold by particular Vendors with respect to which the Company reasonably feels insecure.

This agreement concerns

funding commitment, and not the purchase of Products from Product Handler or Vendors.

Contractual Obligations and Related Party

Related Party Transactions

20 unchanged sentences

areas involving management’s judgments and estimates.

been no material changes in our critical accounting policies from those disclosed in our Annual Report on Form 10-K for the fiscal year

ended December 31, 2024.

There have been no material changes in our critical

accounting policies from those disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

1 unchanged sentence

We are a smaller reporting

company as defined by Rule 12b-2 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) and are not required

to provide the information required under this item.

company as defined by Rule 12b-2 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) and are not

required to provide the information required under this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis